Ackman In A Losing Battle With Herbalife
I am sure there are many reasons that have put Ackman in a losing battle with Herbalife. I could name quite a few off the top of my head, but basically it all comes down to Herbalife’s quality and integrity shining brightly. No company or person, for that matter, is perfect, but Herbalife has sought integrity and excellence in their product and business. Below is an article from Forbes website that discusses the progress and how Ackman is losing the battle with Herbalife, which he initiated a few months ago.
Carl Icahn And Herbalife Are Crushing Bill Ackman
For five months, billionaire hedge fund investor William Ackman has been conducting a high-profile short promotion against Herbalife, calling the nutritional supplements seller a pyramid scheme and betting heavily that its stock would fall. As recently as Monday, Ackman’s public relations machine was email blasting a Hispanic Federation letter urging the Federal Trade Commission to conduct an investigation into Herbalife’s alleged targeting of Latinos.
But this week shares of Herbalife HLF -1.62%have moved sharply against Ackman and his Pershing Square Capital Management hedge funds. The stock rose about 2% in heavy Tuesday morning trading in New York, crossing the symbolic $50 mark. It jumped again shortly after noon, putting the stock up 2.7% on the day, after Herbalife announced it had successfully hired PricewaterhouseCoopers as its new auditor. Shares of Herbalife soared by more than 10% on Monday and are now up 53% in 2013.
Increasingly, it seems like Carl Icahn is getting the better of Ackman in a high-stakes drama that has captivated Wall Street this year. Icahn and Ackman don’t like each other and earlier this year Icahn became a major shareholder of Herbalife and got two of his representatives to join the company’s board of directors. Icahn claimed his investment in Herbalife was based on sound financial and regulatory analysis and that any misfortune befalling Ackman was only an added benefit.
Either way, stock investors appear to be siding with Icahn as financial markets see less and less merit to Ackman’s criticisms of Herbalife. That has helped boost Icahn’s incredible year even further. His bets on Herbalife and Netflix are two of the best-performing investments of the year and Icahn Enterprises, the publicly-traded partnership exposed to both investments, has seen its shares rise by 80% in 2013.
The flip side for Ackman and his investors is that the Herbalife short is significantly hurting his hedge fund returns this year while the stock market booms. Some of Ackman’s other bets, like his large investment in Canadian Pacific Railway, are doing very well. But the U.S. stock market, as measured by the Standard & Poor’s 500 index, has returned 17.8% so far in 2013 and the hole created by Herbalife means Pershing Square’s investors are looking at potentially paying expensive fees for a third straight year of market underperformance.